By 
The US Securities and Exchange Commission (SEC) has issued a five-year temporary exemption that creates a regulatory pathway for certain platforms to trade tokenised versions of publicly listed stocks on blockchain-based infrastructure.
The order, issued on September 17, 2026, grants conditional exemptive relief to Tokenized Securities Venues (TSVs) from the definition of an “exchange” under the Securities Exchange Act of 1934. It also provides a corresponding exemption from the “dealer” definition for certain liquidity providers participating in tokenised stock liquidity pools.
The move could accelerate the development of onchain securities markets in the US while allowing the SEC to gather experience from tokenised trading before considering longer-term regulatory changes.
SEC creates pathway for onchain stock trading
Under the Innovation Exemption, eligible TSVs can facilitate trading in tokenised National Market System (NMS) stocks through permissioned automated market makers and liquidity pools.
The exemption is subject to conditions intended to maintain investor protection and market integrity. Among other requirements, tokenised stocks must provide holders with the same rights and privileges as the equivalent traditional securities, including dividend and voting rights.
TSVs must also provide issuers with notice and an opportunity to object before certain third-party tokenised versions of their stocks are made available for trading.
The SEC has also placed limits on the number of securities and trading volumes that can be handled under the exemption, while requiring smart contracts used by TSVs to be auditable, publicly available and deployed on a public, permissionless distributed ledger.
Five-year relief covers liquidity providers
The order extends beyond trading venues to certain liquidity providers operating within automated market-maker liquidity pools.
Eligible providers can receive temporary relief from the dealer registration requirements where they supply liquidity in tokenised NMS stocks using proprietary capital and engage in activities that could otherwise indicate dealer activity, such as quoting prices to customers or committing capital.
Both exemptions are scheduled to expire five years after publication, giving the SEC time to assess the development of the market and consider potential modifications or further regulatory action. The commission has also requested public comments on the framework.
Tokenisation brings new possibilities for securities markets
Tokenisation involves representing securities on blockchain or distributed-ledger infrastructure, potentially changing how assets are issued, traded, transferred and settled.
Industry proponents have highlighted the potential for tokenised securities to support more continuous trading, faster settlement, greater transparency, increased liquidity and lower transaction costs.
SEC Chairman Paul Atkins said the exemption represents a step towards bringing US capital markets into the digital age.
“Today, the Securities and Exchange Commission is taking a significant step forward, within its statutory authority, to bring America’s capital markets into the digital age by facilitating onchain trading of certain tokenized stocks through the ‘Innovation Exemption,’” Atkins said.
The SEC has stressed, however, that the measure is temporary and is intended to provide a controlled environment for market development while the commission considers whether additional regulatory changes are necessary.
Investor protection remains part of the framework
The exemption does not remove existing federal securities law protections. The SEC has stated that anti-fraud and anti-manipulation provisions continue to apply to securities activities conducted within these markets.
The framework also excludes synthetic representations that do not provide investors with the rights associated with the underlying stock. Tokenised NMS stocks traded under the exemption must provide holders with equivalent rights and privileges to traditional securities.
For tokenised stocks issued by an unaffiliated third party, the trading venue must notify the issuer and provide an opportunity to object before the asset is admitted for trading.
These requirements are intended to establish a controlled environment for onchain securities trading while limiting potential risks to investors and market integrity.
SEC action follows setback for US crypto legislation
The Innovation Exemption comes days after the US Senate failed to advance the CLARITY Act, a broad cryptocurrency market-structure bill that fell short of the 60-vote threshold required to move forward.
The SEC’s action therefore provides a regulatory route for a specific segment of digital asset markets even as broader congressional efforts to establish a comprehensive framework remain unresolved.
The commission has described the exemption as an interim measure rather than a permanent regulatory framework, with public feedback expected to inform future rulemaking.
As financial institutions, exchanges and digital asset firms explore tokenisation, the five-year exemption could provide the SEC with an opportunity to assess how blockchain-based securities trading operates under defined investor-protection and market-integrity requirements.
Comments